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OFFSHORE WIND AND HYDROGEN SOLVING THE INTEGRATION CHALLENGE OSW-H2: SOLVING THE INTEGRATION CHALLENGE ACKNOWLEDGMENTS The study was jointly supported by the Offshore Wind Industry Council (OWIC) and Offshore Renewable Energy (ORE) Catapult, and delivered by ORE Catapult The Offshore Wind Industry Council is a senior Government and industry forum established in 2013 to drive the development of the UK’s worldleading offshore wind sector OWIC is responsible for overseeing implementation of the UK Offshore Wind Industrial Strategy ORE Catapult is a not-for-profit research organisation, established in 2013 by the UK Government as one of a network of Catapults in high growth industries It is the UK’s leading innovation centre for offshore renewable energy and helps to create UK economic benefit in the sector by helping to reduce the cost of offshore renewable energy, and support the growth of the industry AUTHORS: ANGELIKI SPYROUDI KACPER STEFANIAK DAVID WALLACE STEPHANIE MANN GAVIN SMART ZEYNEP KURBAN The authors would like to thank a number of organisations and stakeholders for their support through Steering Committee and Expert Group meetings or individually They include, in alphabetical order: Atkins (David Cole), BEIS (Tasnim Choudhury, Simone Cooper Searle, David Curran, Rose Galloway – Green, Fiona Mettam, Alan Morgan, Allan Taylor, Mark Taylor, Rita Wadey, Alex Weir) Committee on Climate Change (Mike Hemsley, David Joffe, Julia King), Crown Estate Scotland (Mark McKean), EDF Energy (David Acres), Energy Systems Catapult (Nick Eraut, Philip New, Guy Newey), Equinor (Stephen Bull), Good Energy (Juliet Davenport, Tom Steward), Martin Green, ITM Power (Graham Cooley, Marcus Newborough), Johnson Matthey (Sam French), National Grid (Mark Herring, Fintan Slye, Marcus Stewart), ORE Catapult (Vicky Coy, Andrew Jamieson, Stephen Wyatt), Ørsted (Jane Cooper), Renewable UK (Barnaby Wharton), Scottish Government (Kersti Berge), ScottishPower (Joseph Dunn, Iain Ward), Shell (Joanna Coleman, Matthew Reizenstein), SSE (Pavel Miller), Vattenfall (Alistair Hinton, Danielle Lane), Wood Group (Alan Mortimer) OSW-H2: SOLVING THE INTEGRATION CHALLENGE CONTENTS Foreword 05 Key Findings 07 Executive Summary 08 Introduction – the opportunity for hydrogen with offshore wind 1.1 1.2 1.3 Objectives of the study 10 Increased offshore wind in the energy system 10 Hydrogen for essential flexibility and balancing of the energy system 13 1.4 1.5 Hydrogen’s role in securing zero carbon energy supply 13 Opportunity for hydrogen in the oil and gas transition 14 Costs of hydrogen from offshore wind 2.1 Offshore wind input costs for green hydrogen production 16 2.2 Hydrogen production onshore and offshore 16 2.3 Electrolyser cost curves 20 Priorities for a green hydrogen R&D programme 3.1 Introduction 27 3.2 Assessment of R&D priorities for the electrolyser cell stack 28 3.3 Technology roadmap – illustrative key R&D challenges 29 UK and global market potential for green hydrogen 4.1 4.2 The key markets for hydrogen 31 UK and global market forecasts for hydrogen 31 Supply chains and economic opportunity 5.1 Estimates of the new UK economic opportunity (GVA) from OSW-H2 34 5.2 5.3 Market opportunities for hydrogen 35 Existing supply chain and capabilities in the UK 39 Creating value chains - pathways to market development 6.1 Size of the opportunity 42 6.2 Progress so far 43 6.3 Pathways – enabling transport sector value chain 46 6.4 6.5 Pathways – decarbonising the existing gas network value chain 47 Pathways – decarbonising industrial clusters and creating hydrogen hubs 47 6.6 The scale of ambition for the green hydrogen roadmap to 2030 49 OSW-H2: SOLVING THE INTEGRATION CHALLENGE Roadmap for a green hydrogen challenge programme 7.1 Introduction 51 7.2 7.3 Track - R&D programme 51 Track – demonstrations at scale 52 7.4 Track – enabling actions 53 Conclusions and recommendations 8.1 Availability and cost of green hydrogen from offshore wind 55 8.2 UK economic value from OSW-H2, and energy export potential 56 A1 Appendix – OSW-H2 cost assumptions 58 A2 Appendix – Overview of hydrogen projects in the UK 74 A3 Appendix – Overview of hydrogen generation technologies 77 A4 Appendix – List of hydrogen stakeholders 80 A5 Appendix – Assessment of R&D priorities for electrolysers 83 List of Figures 85 List of Tables 86 Abbreviations 87 OSW-H2: SOLVING THE INTEGRATION CHALLENGE FOREWORD As the Offshore Wind Champion, I am delighted to support this report which has been commissioned by OWIC as part of the Offshore Wind Sector Deal It looks at the opportunities and challenges from integrating high levels of renewables on the electricity grid make a strong case for the synergies between offshore wind (OSW) and green hydrogen production Offshore wind and hydrogen together form a compelling combination as part of a net zero economy for the UK, with the potential to make major contributions to jobs, economic growth and regional regeneration as well as attracting inward investment, alongside delivering the emission reductions needed to meet our commitment to Net Zero As demonstrated by the Future Energy Scenarios published in July 2020 and Progress Report by the CCC there will be more need for long term storage With an increasing proportion of variable renewable power on the UK electricity system there will be more time when wind resource is available but capacity is not required on the grid Combining zero carbon electrolytic hydrogen production – green hydrogen - with OSW provides effective use of capital assets and wind resource and a means of long term energy storage This strengthens the business case for future renewables investment as we move beyond the current system of long term contracts for electricity supply The conclusions from the report on hydrogen and offshore wind, work carried out by the Offshore Renewable Energy Catapult for OWIC are as follows: Offshore wind with green hydrogen is a major UK opportunity The UK has outstanding OSW resource, with the potential for over 600GW in UK waters, and potentially up to 1000GW, well above the figure of 75-100GW likely to be needed for UK electricity generation by 2050 This opens up the possibility of growing the OSW industry beyond electricity requirements, with the producing green hydrogen for export if OSW costs continue to fall The industrial base is strong UK has an established industry base to build on: the OSW industry itself, the oil and gas industry with BP and Shell developing Net Zero compatible strategies, and companies on the demand side such as Johnson Matthey, Wright Bus, Alexander Dennis, Baxi, and Worcester Bosch This is further strengthened by rapidly growing UK technology-based companies which combine global reach with UK manufacture - ITM Power, Ceres Power, Intelligent Energy are all important technology players in the electrolyser and fuel cell area Many emerging businesses such as Bramble, Arcola, H2GO, Riversimple, Microcab, FCEV, RFC Power, Ryse Hydrogen also form a key part of the UK’s hydrogen ecosystem Our universities provide the underpinning science and engineering for electrolysers, fuel cells, and hydrogen, and are home to world-leading capability in these areas This research will not only support cost reduction but will help to deliver the next generation of both technologies and companies as well as the scientists and engineers to work in this new industry By 2050 green hydrogen can be cheaper than blue hydrogen With accelerated deployment, green hydrogen costs can be competitive with blue hydrogen by the early 2030s. The main elements of cost for green hydrogen from electrolysis and OSW are electricity cost, equipment costs and electrolyser efficiency With OSW wind costs continuing to decline, electrolyser efficiency increasing and electrolyser costs falling with experience, the time is right to follow an approach akin to that which has been so successful for OSW deployment and cost reduction Action is urgent: developing green hydrogen in the next years will be critical to achieving cost reduction and growing a significant manufacturing and export industry, based on UK technology From an emissions perspective a green hydrogen industry can be safely kick-started without waiting for operational CCS in the UK OSW-H2: SOLVING THE INTEGRATION CHALLENGE This can create a major new manufacturing sector for the UK The overall demand for hydrogen by 2050 in the UK is predicted to be between 100- 300TWh, of comparable scale to the UK’s electricity system today It is estimated to be 25% of Europe’s energy supply, with much more needed globally With green hydrogen becoming as cheap as blue by the 2030s much of this could be produced by OSW and electrolysis The combination of additional OSW deployment and electrolyser manufacture alone could generate over 120,000 new jobs, replacing those lost in conventional oil and gas and other high carbon industries And generate significant economic impact: the OSW and hydrogen study estimates a cumulative GVA of £320bn between now and 2050 This global market for equipment and hydrogen includes £250bn of electrolyser exports A further potential £48bn from green hydrogen exports to Europe, would need an additional 240GW of OSW These figures are for OSW and electrolysers only, they not include significant other original equipment and supply chain opportunities in both the supply and demand areas Opportunities for further inward investment to create jobs have already been demonstrated in ITM Power and Ceres Power, and Siemens interest in investing in an electrolyser giga-factory here Production needs a market, investment needs both Government intervention across multiple Departments is needed to support the concurrent creation of supply and demand in this new industry A national strategy and is needed: an integrated approach to deliver accelerated deployment, supported by appropriate regulation and policy, targeted R and D, demonstration and large scale validation of new developments, combined with continued OSW cost reduction This is an exciting opportunity for the UK, we must act with urgency to get this industry operational and build on the UK’s strengths in this energy source that has finally come of age as we drive for Net Zero Many people have been involved in the work of this Sector Deal working group I would like to thank all of them, particularly my Co-Chair Danielle Lane of Vattenfall and Jane Cooper of Orsted The team at the Offshore Renewable Energy Catapult has produced an important report The members of the Steering Committee, Expert Group and specialist advisory groups who have made numerous suggestions to improve the quality of the analysis and make our conclusions more robust, deserve special credit for their engagement and advice JULIA KING THE BARONESS BROWN OF CAMBRIDGE DBE FRENG FRS OFFSHORE WIND SECTOR CHAMPION 30th July 2020 OSW-H2: SOLVING THE INTEGRATION CHALLENGE KEY FINDINGS OSW OPPORTUNITY ENERGY SYSTEM There is sufficient offshore wind for UK energy needs, plus substantial energy export exports; to exploit this the UK will need to coordinate infrastructure and markets, with neighbours in Europe The UK energy system requires 130TWhr to over 200TWhr hydrogen in 2050, to integrate 75GW, or more of offshore wind 130 to +200 TWh +75 GW COST REDUCTION GREEN AND BLUE HYDROGEN Most of the cost reduction for green hydrogen from offshore wind occurs by 2030, by which point it can meet a significant part of energy demand Green hydrogen from offshore wind costs less than blue hydrogen by 2050*, although factors including more rapid adoption of electrolysers, swings in natural gas prices, leakage of natural gas, or cheaper blue hydrogen generation technologies, could change this picture -58% 2.2 2020 2030 2.23 £/KG H2 £/KG H2 5.2 LCOH PROJECTION FOR PEM ELECTROLYSER 1.55 1.9 2040 Technology acceleration is an essential means of reducing electrolysis costs – the UK has strong leadership in academia and industry to build on 1.6 2.06 1.94 2030 2040 GREEN (PEM) 2050 BLUE (SMR + CO2) 1.65 1.63 BLUE (ATR + CO2) *Hydrogen production from natural gas with CCS might not be a necessary part of a net-zero UK energy economy in 2050 2050 There are signs in the marketplace that green hydrogen will take off faster than we assumed, cutting costs by 2030 by more than we have estimated Driving deployment of electrolysers is essential for reducing their cost – the UK has done this before, with offshore wind POTENTIAL BENEFITS £32OBN Cumulative GVA in 2050 (electrolysers and UK OSW enabled by H2) of which £250bn is exports NEXT STEPS 12O,OOO JOBS Delivering up to 120,000 new jobs, many in manufacturing, mainly outside London & SE To avoid lost opportunities, our roadmap of research, projects and supporting actions to 2030 should be adopted as soon as possible £48BN P.A Additional potential in green hydrogen exports to Europe, using up to 240GW of dedicated offshore wind A wide range of UK companies will benefit from growth of the green hydrogen industry TRACK TRACK TRACK R&D programme Demonstrations at Scale Enabling Actions OSW-H2: SOLVING THE INTEGRATION CHALLENGE EXECUTIVE SUMMARY For the UK to achieve Net Zero emissions in 2050, we are likely to need a minimum of 75GW of offshore wind (OSW) Integrating this level of OSW into our energy system requires us to deal with the variability in its output Recent modelling of the whole energy system, including electricity, heating and transport, indicates that hydrogen will play a major role in integrating the high levels of OSW that feature in leastcost pathways to decarbonisation Scenarios from the Energy Systems Catapult, Imperial College London, Committee on Climate Change, and others, suggest that the requirement for hydrogen ranges from 130TWh, to over 200TWh, per annum A green hydrogen economy using 130 TWh of hydrogen, would require the annual output of 40GW of offshore wind This study looks at the viability, and economic opportunities, of combining offshore wind with hydrogen, via electrolysis We have analysed the cost of green hydrogen generated from UK OSW (‘OSW-H2’) out to 2050, and expect that, in 2050, OSW-H2 will cost less than hydrogen produced from natural gas, with carbon capture and storage (CCS), typically referred to as ‘blue’ hydrogen However, more rapid cost reduction for blue hydrogen generation technology could help it maintain a cost advantage, whereas more rapid deployment of electrolysers, or higher carbon costs for blue hydrogen, e.g from stricter accounting of gas leakage, could accelerate the cost advantage of green hydrogen Volatility in natural gas prices could act to favour either green, or blue, hydrogen The cost reduction in green hydrogen is achieved through accelerated deployment of electrolysis, coupled with targeted research and development (R&D), and demonstration projects and technology validation at large-scale The majority of the cost reduction takes place by 2030 driven in part by the continued cost reduction of OSW itself The period from 2020-2030 is therefore critical, for ensuring steady growth of a hydrogen economy that can integrate increasing amounts of offshore wind, on the path to 2050, and for securing the substantial economic benefit that can flow from green hydrogen UK academia has world-leading strengths in the research areas required to develop improved electrolyser technologies to help drive cost reduction and efficiency gains We have set out the research priorities for a green hydrogen R&D programme, in materials, electrochemistry, and other essential disciplines This forms a key part of our technology roadmap, of core R&D on electrolyser technology, demonstrations of new technology, and development of facilities and standards to validate the market-readiness of new hydrogen generation products We have set out a roadmap of actions for the UK to rapidly scale up OSW-H2 and become competitive with other fuels Through a series of projects across industry, mobility and heating for homes and business, stable demand side applications can be developed By targeting sectors and projects where green hydrogen will quickly become competitive, the roadmap minimises the public investment required There is a growing amount of existing activity aimed at developing markets and technologies for hydrogen We have summarised these and the potential pathways, and essential stakeholders, for accelerated deployment Building on this, our roadmap points to a series of enabling actions to support the technology innovation journey, and to support development of markets, and in particular, near-term development of hydrogen hubs around large industrial clusters The OSW-H2 roadmap creates substantial economic benefit for the UK By 2050 the cumulative gross value added (GVA) from supply of electrolysers and additional OSW farms, is up to £320bn, the majority from exports of electrolysers to overseas markets This activity supports up to 120,000 additional jobs, which are expected to be based mainly in regions outside London and the South-East, in manufacturing OSW-related activity, shipping and mobility We have identified a wide range of potential beneficiaries in UK manufacturing and engineering, giving us confidence that UK companies can secure a major share of the supply chain for electrolyser projects In addition, we have identified a strong potential for creating a major UK energy export industry, supplying our abundant, low-cost OSW-H2 to mainland Europe, which OSW-H2: SOLVING THE INTEGRATION CHALLENGE is forecast to have a large demand for green hydrogen imports in 2050 Our OSW-H2 exports to Europe alone, could have an annual value of up to £48bn, comparable with the best years of the North Sea oil and gas industry We have ample, and inexhaustible, OSW to meet this need, and to supply into a global market for green hydrogen In addition, the green hydrogen consumer economy that this will create in the UK, is likely to have even greater value, in downstream hydrogen gas networks, vehicles, heating appliances, industrial applications, and power generation For government and industry, the journey, and the required commitments, are similar to the successful cost reduction journey for OSW, but the financial support required is on a smaller scale Ambitious national targets for deployment are essential, to bring forth the private investments required in innovation, and early projects Our abundance of affordable renewable resources gives the UK a competitive advantage However other governments with smaller resources recognise the hydrogen opportunity and are already setting ambitious targets for green hydrogen The window of opportunity is short By supporting the level of deployment on our roadmap, the UK can replicate the successful, rapid reduction in cost that we have seen for OSW, making OSW-H2 the lowest cost source of bulk hydrogen for the UK in 2050, and providing a secure, economically rewarding path to a zero-carbon energy sector by 2050 OSW-H2: SOLVING THE INTEGRATION CHALLENGE INTRODUCTION – THE OPPORTUNITY FOR HYDROGEN WITH OFFSHORE WIND 1.1 OBJECTIVES OF THE STUDY In its 2019 report on how the UK can achieve ‘Net-Zero’ carbon emissions in 2050, the Committee on Climate Change (CCC) pointed to OSW becoming potentially the largest source of zero-carbon energy, in 2050¹, with installed capacity of 75GW The CCC report emphasised the need for measures that can integrate this level of variable-output renewable energy into the energy system Offshore Renewable Energy (ORE) Catapult has partnered with the Offshore Wind Industry Council (OWIC) Solving the Integration Challenge (StIC) task force on this study, to examine the potential for hydrogen to play a key role in providing the flexibility, and short and long-term energy balancing, required for integrating high percentages of OSW into the UK energy system, and the actions required to achieve this Our study addresses: • The amount of hydrogen required to achieve Net-Zero in 2050 • The costs of green hydrogen produced with OSW (OSW-H2), compared with the cost of fossil-fuel derived alternatives • The technology challenges for driving down OSW-H2 costs, particularly for electrolysers, and the R&D programmes and demonstration projects required to solve these challenges • The growth in hydrogen markets required to drive down costs • The promising sources of cost-reducing market growth, to 2030 • The supply chain opportunity for the UK, including exports, in particular of electrolysers • The supporting policies, for research and demonstration and for market scale-up In a related study, Energy System Catapult (ESC) has applied its whole energy system modelling to provide insights into the potential scale of OSW, and the scale and role of H2 in system balancing 1.2 INCREASED OFFSHORE WIND IN THE ENERGY SYSTEM By 2050 the UK energy sector may have to be 100% decarbonised Other sectors such as agriculture, and steel and cement manufacturing are intrinsically difficult to decarbonise The recent trend of accelerating negative effects from climate change may continue, pulling forward zero-carbon deadlines, for the UK and her trading partners 100% decarbonisation will require the replacement of natural gas for heating, and oil for vehicles, with zero-carbon alternatives If there is an affordable, large-scale source of zero-carbon electricity, the majority of heating and personal transport is likely to be electrified In this scenario, even with robust efficiency improvements, UK electricity end-use demand may double, from ~300TWh today, to 500600TWh by 20502 Net Zero – The UK’s contribution to stopping global warming, CCC, 2019 Digest of UK Energy Statistics, Chapter 5: Electricity, National Statistics, 2019 OSW-H2: SOLVING THE GROWTH INTEGRATION PLATFORM CHALLENGE REPORT 10 A APPENDIX OVERVIEW OF HYDROGEN PROJECTS IN THE UK An overview of hydrogen projects in decarbonising mobility sector: Name Location Output Towards commercial deployment of FCEV buses and hydrogen refuelling Aberdeen station Liverpool 30 buses Hydrogen Mobility Expansion Project II Crawley Northern Ireland Hydrogen Transport Belfast station 51 cars buses Funding value Leader £6.4m BOC £3.1m Element Energy £2.0m Viridian Energy Supply Wrightbus £1.3m Tees Valley Combined Authority 17 cars £1.3m Riversimple Birmingham train Confidential HySeas III Orkney ferry Confidential HyFlyer Orkney medium range small passenger aircraft £5.3m Alstom H2 Breeze - conversion of existing Class321 trains for the UK market Available in 202258 n/a Series of trains Confidential Tees Valley Hydrogen Transport Initiative Middlesbrough and Stockton on Tees stations Riversimple Clean Mobility Fleet Monmouthshire HydroFlex – fitting a hydrogen pack to an existing Class 319 train set cars Porterbrook BCRRE Ferguson Marine Engineering Zeroavia EMEC Alstom Eversholt Rail 58 http://www.ukh2mobility.co.uk/news-media/announcement/alstom-and-eversholt-rail-unveil-a-new-hydrogen-train-design-for-the-uk/ OSW-H2: SOLVING THE GROWTH INTEGRATION PLATFORM CHALLENGE REPORT 74 A APPENDIX An overview of hydrogen projects in decarbonising gas network: Name Description Location Funding value Hy4HEat Study to establish technical and safety feasibility of 100% hydrogen residential gas supply TBC £25m H21 Projects designed to support conversion of the UK gas networks to carry 100% hydrogen Partners ARUP Kiwa Cadent Leeds (Yorkshire) £10m Northern Gas Networks SGN HyDeploy & Energy trial to demonstrate the injection of (up to 20%) hydrogen into the public gas network Keele & North of England £22.1m H100 feed study Project to trial a 100% hydrogen residential gas supply Levenmouth £2m Energy Kingdom Whole energy systems feasibility study to trade flexibility across electricity, NG and hydrogen, heat (hybrid heat pumps) and transport Milford Haven Demonstrating Orkney Islands as a replicable Hydrogen Territory, using curtailed renewable energy generated locally to produce hydrogen Orkney BIG HIT Cadent ITM Power SGN ORE Catapult Pembrokeshire City Council £2m ORE Catapult Riversimple £5m EMEC ITM Power An overview of hydrogen projects in industrial sector: Name Description Location Scotland’s Net Zero Infrastructure CCS project that will link industrial emitters around Grangemouth, with a pipeline to St Fergus Scotland Net Zero Teesside Project CCUS project that aims to decarbonise a cluster by 2030 Teesside Humber Industrial Decarbonisation Deployment Project It will identify and develop potential anchor projects to maximise emission reductions and develop industrial CO2 transport and storage system Humber HyNet CCUS Part of HyNet projects that will provide the infrastructure to transport and store the CO2 produced as a by-product of the hydrogen production process North West South Wales Industrial Cluster SWIC will identify process options to reduce carbon emissions and options for CCUS South Wales Green Hydrogen for Humber It will lead to the production of renewable hydrogen, at the GW scale, from PEM electrolysis This will be distributed to a mix of industrial energy users in Humberside Humberside OSW-H2: SOLVING THE INTEGRATION CHALLENGE 75 A APPENDIX An overview of hydrogen projects in industrial sector: Name Description Sectors HyNet North West Testing a range of hydrogen industrial use opportunities across the North West and developing a hydrogen CHP Funding value Partners Glass Beauty Progressive Energy £5.2m Pilkington Refinery Unilever State-of-the-art fuel mix for UK cement production to test the path for net zero Testing switching UK cement production to operate on low carbon fuels including hydrogen, biomass and electrification Cement production £3.2m Mineral Productions Association Alternative fuel switching technologies for the glass sector Trialling the potential for the glass sector to use alternative fuels (electric, hydrogen, biofuel and hybrid-fuel melting technologies) Glass £7.1m Glass Futures Ltd 10 Hydrogen Alternatives to Gas for Calcium Lime Manufacturing Testing the use of hydrogen in the high calcium lime manufacturing, servicing markets like iron or steel manufacturing £2.8m British Lime Association Iron Steel An overview of hydrogen projects in production sector: Name Description Location Funding value Partners HyNet & Development and deployment of low carbon hydrogen plant which enables CCS Liverpool Bay area £7.5m Dolphyn Detailed design of a 2MW prototype system to enable the production of hydrogen at scale from offshore floating wind Aberdeen £3.1m ERM Gigastack Feed study of PEM electrolyser using electricity from OSW farm to generate hydrogen for refinery Grimsby £7.5m ITM Power, Orsted, Humber Refinery Acorn Hydrogen Project FEED study to develop an advanced reformation process for hydrogen production from North Sea Gas using CCS Aberdeen £2.7m HyPER Build a 1.5MW pilot scale demonstration of the sorption enhanced steam reforming process to supply hydrogen Cranfield £7.4m Surf ’N’ Turf Tidal power devices and communityowned onshore wind turbine route their surplus electricity to a 500kW electrolyser Orkney £1.46m Cadent Progressive Energy Production CCS Cranfield University GTI Community Energy Scotland, EMEC, ITM Power OSW-H2: SOLVING THE INTEGRATION CHALLENGE 76 A I APPENDIX OVERVIEW OF HYDROGEN GENERATION TECHNOLOGIES HYDROGEN PRODUCTION TODAY Hydrogen is a key feedstock in many industries such as ammonia production and in steel working industries Most hydrogen in the UK (96%)59 is produced through SMRs Most hydrogen production is therefore centralised around four main locations in the UK (Pembroke, Humber region, Cheshire and north east Scotland) and distribution in the UK is limited to fuel tankers Large-scale distribution of hydrogen for a low carbon economy would require the use of hydrogen within existing gas networks and in the transport sector This requires not only a large uptick in the production of hydrogen using green methods but also the upgrade of gas and distribution networks The UK government is moving towards a more distributed hydrogen economy, with five new hydrogen production plants proposed equalling £28m of investment60 This is part of the wider BEIS industrial strategy towards a greener economy The five projects are a mixture of green hydrogen through the electrolysis of water, or blue hydrogen through steam methane reforming with carbon capture Most of the hydrogen produced today is derived from methane (natural gas) in one of the UK’s seven refineries The three main methods are through steam methane (using water as the oxidant and source of hydrogen), partial oxidation (using air as the oxidant), or through autothermal reforming The current cost of hydrogen using SMR is between £1.3 and £1.9/kg H2 The lower range are for systems with a low gas cost and no CCS process, and the upper cost is for high gas prices and including CCS There are other ways to generate hydrogen without the use of a fossil fuel as a feedstock, such as gasification of biomass, or electrolysis from water and electricity Technology costs and efficiencies vary depending on the scale and technology type, but the table below gives an outline of hydrogen production and the relative costs of each pathway While relative costs of electrolyser technology are high today, the falling costs of electricity with the increase of renewables, along with falling costs associated with technology scale, will make hydrogen markets increasingly competitive through the next decade61 Fuel Technology Carbon Emissions Relative Cost Natural Gas/ Oil SMR, ATR, Partial oxidation High (without CCS) Low (with CCS) Low Medium Coal Fuel Gasification High Medium Biomass Fuel Gasification Medium Medium Electricity Electrolysis Medium High Renewable Electricity Electrolysis Low Medium 59 Hydrogen production share in the UK by method 2019 (sourced on statista.com) 60 BEIS strategy 18 Feb 2020: www.gov.uk/government/news/90-million-uk-drive-to-reduce-carbon-emissions 61 The Future of Hydrogen, IEA report 2019 (accessed 25/02/2020) OSW-H2: SOLVING THE GROWTH INTEGRATION PLATFORM CHALLENGE REPORT 77 A II APPENDIX ELECTROLYSER TECHNOLOGIES Commercially available electrolyser technologies tend to come in two main types: AEL and PEM which is a new commercially available offering Other, less commercially mature technologies such as solid oxide electrolysers have promise, but are unlikely to be commercially competitive in the next 10 years The following table compares the two technologies, at current levels and in 202562 Technology   Efficiency III AEL PEM unit 2017 2025 2017 2025 kWh electricity/ kg H2 51 49 58 52 Efficiency (LHV) % 65 68 57 64 Response time H/M/L H M M H Lifetime operation Operating hours 80,000 90,000 40,000 50,000 CAPEX EUR/kW 625 400 1000 585 OPEX % of CAPEX/ year 2 2 Stack replacement cost £/kW 285 180 350 175 Typical Output pressure Bar 15 30 60 System Lifetime Years 20 20 PROTON EXCHANGE MEMBRANE ELECTROLYSIS Polymer electrolyte membrane, or PEM electrolysers, submerge a cathode and anode into an H2O solution with a solid polymer barrier that is responsible for the conduction of protons (H+) This allows for the production of oxygen on the anode side and the production of H2 gas on the cathode side A COMMERCIAL VIABILITY PEM electrolysis at commercial scale is around five years away, with only small-scale deployment currently available As such, the current costs and lifetime replacements associated with PEM technologies is higher than other types of electrolysis However, the typical output hydrogen for PEM electrolysers are high density, high purity hydrogen This is useful for long term and cheaper storage of hydrogen In addition, PEM electrolysers operate at high current densities, and their efficiencies, especially in fluctuating conditions, can be high (over 60% in some cases) Hydrogen production via electrolysis, 2017 62 OSW-H2: SOLVING THE INTEGRATION CHALLENGE 78 A B APPENDIX APPLICABILITY TO OFFSHORE WIND The main appeal of PEM electrolysis over AEL technologies is the demand response applications of PEM technologies Their ability to perform well not only in fluctuating conditions, but also in partial or overloaded conditions make them an attractive option when combined with renewable electricity sources IV ALKALINE ELECTROLYSIS Alkaline water electrolysis produces hydrogen from having two electrodes in a liquid alkaline electrolyte solution The electrodes are separated by a diaphragm, which transports the hydroxide (OH) from one electrode to the other (as shown below): OXYGEN e- e- HYDROGEN SEPARATOR H2O OH- ANODE: OXIDATION Oxygen evolution reaction 4OH- → O2 + 2H2O + 4e- A CATHODE: REDUCTION Hydrogen evolution reaction 4H2O + 4e- → 2H2 + 4OH- COMMERCIAL VIABILITY AEL has been the main industrial scale electrolysis for nearly a decade For this reason, it is well understood as the most commercially advanced form of electrolysis AEL have certain advantages over PEM technologies such as: cheaper catalysts; higher durability due to an exchangeable electrolyte; and higher gas purity due to lower gas diffusivity in alkaline electrolyte B APPLICABILITY TO OFFSHORE WIND The technology works most efficiently under high, steady electricity flow Disruptions to the flow can reduce the efficiency by over 20% while also reducing the lifetime of important components like the anodes Most electrolysis systems have an inherent ‘inertia’ in which they take time to respond to changes in power This is most pronounced in alkaline water technologies, which has slow starting times, and so would therefore not be wholly suitable for being used to generate hydrogen from fluctuating electricity sources like wind energy OSW-H2: SOLVING THE INTEGRATION CHALLENGE 79 A APPENDIX LIST OF HYDROGEN STAKEHOLDERS Stakeholder Category Hydrogen production and supply chain Hydrogen transmission Refineries/SMRs End User Storage Stakeholder Location Aragon Hydrogen Foundation International Arcola Energy LTD National AREVA H2Gen International Ballard Fuel Cells National Boc National Bright Green Hydrogen Fife Calvera International Ceimig Dundee Cenex East Midlands Ceres power West Sussex Enocell Bo’Ness Fuel Cell Systems Berkshire ITM Power Sheffield Linnet Technology Stirling Logan Energy Edinburgh NanoSUN Lancashire Pale Blue Dot Aberdeenshire Proton Motor GmbH International Proton Onsite International Pure Energy Centre Shetland Taylor Construction National Vivarail Humber Region Air Products Surrey Fawley Exxon Southampton Grangemouth Petrolneos Central Belt Killingholme Phillips Humber Region Lindsey Total Humber region Pembroke Valero Pembrokeshire Stanlow Essar Cheshire Hydrogen Fuel Cell Association National Chesterfield special cylinders Chesterfield EDF National Equinor National Scottish Power Scotland SSEHL Humber Region Storenergy Cheshire Uniper East Midlands OSW-H2: SOLVING THE GROWTH INTEGRATION PLATFORM CHALLENGE REPORT 80 A APPENDIX Stakeholder Category Industrial Groups Policy and decision makers Relevant Skills (eg O&G) Gas network Natural Gas production (onshore pipeline) Academia Testing and R&D Stakeholder Location Aberdeen Renewable Energy Group Aberdeenshire British hydropower Association National Hydrogen London London HySAFE International North West Hydrogen Alliance North West The hydrogen Group National BEIS London Fife Council Fife HIE Scottish Highlands Orkney Islands Council Orkney Scottish Enterprise Scotland Anglo American London BP National British Geological Survey National Caledonian Maritime Assets Scotland DEME National Johnson Matthey National OGTC Abderdeenshire Shell National SPR Glasgow SSE Glasgow Cadent   Express Pipework Systems   Phoenix Natural Gad NI Scotia Gas   SGN   Thyson   Wales and West Utilities   Bacton North Norfolk Barrow Cumbria Easington East Yorkshire St Fergus Aberdeenshire Theddlethorpe East Lindsey Edinburgh Napier University Edinburgh ESP Stirling Heriot Watt University Edinburgh St Andrews University St Andrews University College London London University of Edinburgh Edinburgh University of Strathclyde Glasgow AVL Midlands (Coventry, Basildon) DNV GL Aberdeenshire EMEC Orkney ETC East Kilbride OSW-H2: SOLVING THE INTEGRATION CHALLENGE 81 A APPENDIX Stakeholder Category Consultancy and Engineering SMEs Road transport Boilers Stakeholder Location Abbott Risk Consulting Edinburgh Anderson Strathern Edinburgh Aquaterra Orkney Arup National Delta-EE Edinburgh E4Tech London Element Energy London Ellis IP Edinburgh Europeam Policy Solutions Clackmannanshire Frazer-Nash Consultancy Dorking Green Hydrogen consulting Glasgow Hydrenor Aberdeenshire ICS East Midlands Kiwa Gastec Gloucestershire Locogen Edinburgh Risktec National Systeng Consulting Edinburgh TUV SUD National ULEMCo Liverpool Almaas Technologies Glasgow iPower Stirling Arcola Energy Huyton Intelligent Energy Loughborough Luxfer Nottingham MicroCab Coventry Millbrook Bedford Raffenday EV   Riversimple Powys Baxi Heating Preston Worcester bosch Worcester OSW-H2: SOLVING THE INTEGRATION CHALLENGE 82 A APPENDIX ASSESSMENT OF R&D PRIORITIES FOR ELECTROLYSERS SCORING CRITERIA FOR INNOVATION CHALLENGES Criteria Explanation Scores 0=None/not applicable Cost reduction How much potential the technology has to reduce the cost of hydrogen 1=Low (5%) 0=None/not applicable Durability How much potential the technology has to increase the durability and lifetime of the electrolyser 1=Low (5%) Demand Response The potential for the technology to improve response time and power output under fluctuating electricity sources A high score would therefore increase the markets as part of the wider energy system 0=None/ not applicable 1=Small amount of improved response time (5% improvement) 0=Not applicable Technical Risk How much risk (and time/costs etc.) is involved with bringing the technology to full commercialisation Early stage developments are higher risk (and lower scoring) and near to market technologies score higher 1=High risk (>10 years to full commercial development) 2=Medium risk (3-10 years to full commercial development) 3=Low Risk (